Higher futures prices in China and the stronger local market on Thursday and Friday have led to another round of import HRC transactions in China. Other Asian countries like Vietnam and Taiwan have also booked some quantities. The major source is still India.
China imports actively again
The first deals this week for ex-India HRC to China were done at about $410/mt CFR and slightly above by the main private steel mill with the total tonnage estimated at 80,000 mt.
Higher interest in purchases from traders in China have supported a price increase in further deals. At least three deals for Indian coils have also been concluded, at $415-420/mt CFR China. For the first time in recent months, an Indian state-owned mill has concluded a 'trial' deal for a small volume of 15,000 mt at $400/mt FOB to China during the week, which translates to about $415/mt CFR. There has also been a rumour about a deal for ex-Vietnam HRC signed at $420/mt CFR to China recently, but this information has been disproved by SteelOrbis as the contract was not finalized by late Friday.
According to Chinese traders, about four to five deals for Indian coils have been done in China just over Thursday and Friday owing to higher futures prices, overall better sentiment in the market, and the raw material price hike.
As SteelOrbis reported earlier, last week a small cargo of Japanese coils was traded to China at $415/mt CFR and South Korean HRC, which is usually priced at a higher level compared to ex-India material due to lower import duty, was traded at $420-425/mt CFR.
Background
Rising futures have been one of the main reasons behind the high import activity. HRC futures prices at Shanghai Future Exchange have added RMB 109/mt ($15.3/mt) to RMB 3,542/mt ($497/mt) on Friday.
Chinese traders have been willing to buy imported coils, seeing higher demand in the local market and even some supply shortage in the northern part of the country. Average local HRC prices in China have added RMB 40/mt ($5.6/mt) on Friday to RMB 3,590-3,650/mt ($503-512/mt) ex-warehouse, according to SteelOrbis’ information.
The recent announcement by the People's Bank of China of an injection of RMB 300 billion ($41.2 billion) into the money markets on Friday has supported sentiments in the Chinese steel market.
At the same time, iron ore prices have broken the $100/mt CFR mark today, Friday.
Rest of Asia also shows demand
Demand for imported HRC in the rest of Asia has also been seen this week, though it has been much slower. In the middle of the week, one of major Indian mills sold 20,000-25,000 mt of HRC to Vietnam at $418/mt CFR. The price level is lower than contracts registered last week with the highest of them at $435-440/mt CFR for small volumes. The latest bids from Vietnam have been heard at $415/mt CFR. Strong buying from China is expected to push HRC prices in Vietnam up again, but sources have said that for now demand in Vietnam is very weak. Offers for South Korean coils have increased to $440-445/mt CFR, while those from China have risen to $440/mt CFR.
According to the reports in the market, an Indian mill has also booked 20,000 mt of HRC to Taiwan at $415-420/mt CFR this week, which reflects the current workable level in Southeast Asia.